AWWA JTMGT69627

The City of Virginia Beach, Virginia, retained Brown and Caldwell to help formulate a capital improvements program (CIP) for its 405 sanitary sewer pump stations, with the objective of reducing the incidence of pump station failures and subsequent spills. The approach taken was risk-based, but went beyond the usual qualitative approach to include full monetization of risk, with the following advantages: monetization of both the costs and benefits (risk avoided) of CIP projects allowed a full benefit/cost analysis, with subsequent improved project prioritization; and, because benefits were defined in both life-cycle and triple-bottom-line terms, the "value to the community" of each proposed project could be calculated, and those projects not bringing value commensurate to their costs eliminated from the CIP. The focus of this paper is the use of risk monetization, which is fundamentally different from CIP approaches generally used in the past and bring an entirely new promise. Approaches based on risk monetization, when combined with triple bottom line costing, attempt to go further and to identify the benefits of a project in dollar terms. Those benefits can then be compared with the project's cost and the value of the project as a community investment can be gauged via either return on investment of time-adjusted benefit/cost ratio. A general manager (for instance), responsible for a major infrastructure network who builds his or her CIP based on a risk monetization approach, is in an excellent position to tell the governing board, "Every project in this CIP has been examined from the community's point of view. I am satisfied that each is a good investment and brings benefits exceeding its costs." If such a statement can be made, adequate funding for the CIP is more likely to be made available. Includes tables, figures.